Project I Team Project: Economic Reasoning, Rational Decision Making, Market Dynamics and
competition- Worth 25 Points
Due: May 22nd, 2024 no later than 11:59 pm
This team project is designed to make use of the theories involved in economic decision-making and
economic thinking. In this project, you are expected to identify how economic units behave under
scarcity and make rational and irrational choices. This work accounts for 25% of your total grading of
the course. This project has the following two main parts:
PART ONE: IRRATIONAL Vs. RATIONAL DECISION-MAKING
a) Irrational Decision Making
Consider a good or service where consumers pay more than its actual valuation (for e.g., products
with markup prices at retail significantly higher than their costs: greeting cards, bottled water, stock
price, movie theater popcorn/candy, etc.) or a situation where people make a choice at a loss (stock
market bubble, shame, and pride, urgency purchase- last-minute shopping, etc.). Based on the
economic principles covered in the class (scarcity, value, price, opportunity cost, rational Vs.
irrational decision making, and marginal analysis), explain why such irrational decision-making could
take place in this situation.
b) Choice under scarcity
Consider an actual scarce resource that requires efficient allocation and provide an economic analysis
that applies to this scarce resource for a given economy (e.g., underground water, ocean and
biodiversity, arable land, vaccines, etc. ). In this analysis, explain why scarcity of this resource exists
for the economy under consideration. Use data to justify.
PART TWO: Empirics
This part of the project is intended to further your understanding of how firm behavior is informed by
economic principles and public policy in real-life applications.
Collect data on a specific industry or firm. Discuss the industry through the lens of notions covered
under the microeconomics part of the course. Topics of coverage include the twin forces of the market
(supply and demand), market responsiveness or elasticity, rational decision making, pricing strategies,
public goods, externalities, market dynamics, and competition. Here, extraction of actual data and
visualization of the industry/company trends is strongly recommended and highly valued.
NB: Please, provide a proper citation of any resource used in this work. Use APA Standard for the
format of your final submission.